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  • Judicial Reorganization/Insolvency

Judicial Reorganization/Insolvency

Economy crisis generally affects the financial situation of companies, due to greater default, the company tending to become more competitive in relation to prices, consequently decreasing results, and worsening conditions such as longer terms for receiving payments, shorter terms for paying suppliers and increase in interest rate, factors that affect the economic health of the company.

Judicial Reorganization

There is an initial phase of financial restructuring that can take place in the Company, which includes renegotiating with suppliers and clients, trying to increase capital or refinancing with banks.  However, there is a limit to how much the company can obtain with this negotiation.  If this initial restructuring is not fully successful, the shareholders might run the risk of paralyzing the business. In this situation, they may consider Judicial Reorganization as an option to continue the Company’s activities and preserve jobs.